What Happens If You Crash A Leased Car?
If you’ve ever wondered what happens if you crash a leased car, you’re not alone—and the answer isn’t always straightforward. Unlike a traditional car accident, a car accident in a leased car involves additional layers of responsibility, including obligations to the lease company, potential out-of-pocket costs, and strict insurance requirements. Understanding how to navigate this situation is essential for protecting your finances and staying in compliance with your lease agreement.
If you’ve been involved in a leased car accident and need help understanding your options, call Allbee Law Firm at (972) 848-4848 today.
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Immediate Steps To Take After A Leased Car Accident
Prioritize Safety And Document The Scene
Your first responsibility in any auto accident is to ensure everyone’s safety. Move your vehicle to a safe location if possible and call 911 to report the crash. Even if the accident appears minor, a police report is essential for your injury claim and to satisfy your car lease company’s requirements.
Take photos of the scene, including vehicle damage, license plates, road conditions, and any visible injuries. Exchange contact and insurance information with all parties involved. This documentation will be critical in determining who was at fault and dealing with your insurer and the lease company.
Notify The Police And Lease Company
Once you’ve taken initial safety steps, it’s time to notify the police and your lease company. Most lease agreements require prompt reporting, and failure to do so could result in added fees or even jeopardize your lease.
If you were injured in the accident, we strongly recommend contacting an auto accident lawyer at Allbee Law Firm before speaking with any insurance companies. By setting up your insurance claim for you, we can help ensure nothing is said that might unintentionally reduce the value of your case.
Understanding Your Lease Agreement's Accident Terms
What Lease Agreements Typically Require
When you lease a car, you agree to maintain it in good condition and follow specific protocols in the event of an accident. Your lease contract will usually require that any damage be repaired using authorized shops and that you notify the leasing company immediately after an accident involving a leased vehicle.
In many cases, lease agreements mandate that repairs meet manufacturer specifications. You’re also required to carry certain types of car insurance, including comprehensive and collision coverage, to protect the leased vehicle in case of a crash.
Consequences Of Non-Compliance
Failing to comply with the terms of your lease can have serious consequences. If you don’t report the accident to the leasing company or perform unauthorized repairs, you may be in breach of contract. This could result in extra charges at the end of your lease, or worse, immediate demands to cover the remaining lease balance.
Some lease companies also charge administrative fees for handling accidents, so understanding and following your lease agreement is critical after a leased car accident.
Determining Fault In A Leased Car Crash
How Fault Impacts Your Responsibility
Determining who was at fault for the accident plays a major role in what happens next. If you caused the crash, your auto insurance should cover the damage up to your policy limits, but you may still owe the lease company, depending on the outcome. If someone else caused the accident in your leased car, their insurer may be responsible for covering damages, though you’ll still need to deal with your lease provider.
In both cases, the value of the vehicle and how much you still owe on the lease will factor into whether you end up paying out of pocket.
Dealing With Disputed Fault Scenarios
Things can get more complicated when fault is unclear or shared. The insurance companies will investigate the incident and determine responsibility. You might also need to hire a car accident lawyer, especially if you’re being wrongly blamed or facing denied claims.
Because the lease company has a vested interest in the car, they may also get involved in determining liability, particularly if the leased vehicle is deemed a total loss.
Insurance Requirements And Coverage For Leased Vehicles
Insurance You Must Carry On A Leased Car
When driving a leased vehicle, your contract requires you to maintain higher-than-average insurance coverage. This typically includes comprehensive and collision insurance and liability coverage that meets the minimum limits set by your state.
Some lease agreements go even further, requiring lower deductibles to minimize financial risk. This ensures that, in the event of an accident, there are no gaps in coverage that could affect the lease company’s investment.
How Insurance Handles Lease Obligations
When you’re involved in a leased car accident, your insurance company usually pays the vehicle’s actual cash value (ACV) directly to the lease company, not to you. This amount may not cover the full amount you still owe on your lease, especially if the car has depreciated rapidly.
That’s where gap insurance comes in, bridging the difference between the ACV and your remaining lease payments.
The Importance Of Gap Insurance For Leased Cars
How Gap Insurance Protects You
Gap insurance can be a financial lifesaver if you’re involved in an accident in a vehicle where the leased car is totaled. It covers the “gap” between what your car insurance pays and what you still owe on your lease. Since leased vehicles depreciate quickly, the actual cash value that your insurer provides may fall short of the remaining lease balance.
For example, if your insurance company determines that the value of the car is $20,000 but you still owe $25,000 on your lease, gap insurance covers that $5,000 difference. Without it, you would be stuck paying the remainder out of pocket.
What Happens Without Gap Coverage
If your lease agreement didn’t include gap insurance or your policy lapsed, you could be responsible for covering the difference on your own. This can be financially devastating, especially if the leased vehicle is totaled early in the lease term.
Some lease companies automatically include gap coverage in the terms of the lease, while others require you to purchase it separately. Always check your lease agreement to confirm whether you’re protected.
What To Expect If The Leased Car Is Repairable
Approval Process And Repair Standards
If your car is repairable, the lease company will usually require that all repairs be performed at an approved body shop. This ensures that the repairs to the car meet the manufacturer’s standards and don’t reduce the value of the car in a way that affects its resale.
Make sure you follow the procedures laid out by your lease provider. Unauthorized or low-quality repairs can result in penalties at the end of the lease, or you could be required to pay to redo the repairs correctly.
Continuing The Lease After Repairs
Once the car is fixed, you can typically continue driving it under the terms of your lease agreement. However, you’ll want to retain all documentation from the repair shop, insurance company, and leasing agency in case there are any issues later. Keeping thorough records helps protect you from property damage claims or disputes when it’s time to return the car.
What Happens When A Leased Car Is Declared A Total Loss
Who Determines Total Loss And What It Means
If your leased vehicle is so badly damaged that the insurance company decides the car is declared a total loss, it means the cost of repairing it exceeds a significant percentage of its market value. The insurer will calculate the actual cash value and issue a payout, typically directly to the lease company.
The leased vehicle is deemed a total loss when the value of the vehicle doesn’t justify the cost of repairs. At this point, you’ll stop driving the car, and your lease may be terminated, though you could still owe money depending on your coverage.
How The Lease Is Closed Out
If you have gap insurance, it will cover the difference between the insurance payout and the amount owed on the lease. Without it, you’re liable for any remaining balance. Once the lease company receives full payment—either from your insurer alone or in combination with gap coverage—the lease can be closed.
Depending on your lease terms, you may also incur additional fees, especially if there were unpaid lease payments or excessive mileage at the time of the car accident with a leased vehicle.
Ending Or Replacing A Lease After A Totaled Vehicle
Can You Start A New Lease Right Away?
After resolving the current lease—especially if the leased vehicle is totaled—you can often begin a new lease agreement, particularly if you leased through a dealership that offers replacement programs. Some lease companies will work with you to start over with a new vehicle once all outstanding balances are settled.
This process typically requires a credit check and approval, but it can be relatively seamless if you have gap insurance and no other contract violations.
Handling Lease-End Obligations
Even if the car was totaled, you may still be responsible for items like excess mileage charges or wear-and-tear fees, depending on the terms of your lease agreement. If the accident happened close to the lease end, the lease company may require a final inspection or accounting of remaining obligations.
If your car was repairable and you kept the lease active, be prepared for a thorough review at the end of the lease. Any remaining damage or unapproved modifications could result in fees.
When To Contact A Car Accident Lawyer
Injury Claims Involving Leased Vehicles
If you were injured in a car accident with a leased car, it’s essential to have an advocate who understands both personal injury law and the complexities of leased car situations. Accidents involving leased vehicles often include additional paperwork, insurance layers, and strict requirements that can complicate your injury claim.
You shouldn’t have to navigate these challenges alone—especially while recovering from your injuries.
How Allbee Law Firm Supports Injury Victims
At Allbee Law Firm, we focus on helping injury victims receive the compensation they deserve. If your leased car accident resulted in medical bills, missed work, or lasting pain, we’re here to stand up for your rights and handle the legal process on your behalf.
Our injury attorneys have the experience to manage the added complexities that come with injuries sustained in leased vehicles, while ensuring you’re treated fairly by the insurance companies. If you’ve been injured in an accident, call us at (972) 848-4848 for a free consultation and personalized guidance.